Monday, March 05, 2007

Daniel Klein on Smith-Hayek

The place of Adam Smith in the lineage of economists is a controversial subject: his legacy has been claimed by various strands among the economists’ camps and political groups. The dominant one is that of the neoclassical paradigm (out of Chicago); less numerous are those economists in the Left tradition and its slightly larger Right tradition.

The Austrians, as far as I can see, especially if Murray Rothbard is still representative, are hostile to most of what Smith wrote, though it may be that it was just Rothbard who got it wrong about him (he certainly muddled up completely Adam Smith’s writings on the division of labour and his alleged labour theory of value).

But the Hayek tradition is quite different, apparently. My own work on Smith includes a look at the ‘invisible hand’ attributions and I have found some alignment of views with Hayek’s ‘spontaneous order’ (which I prefer to call ‘emergent order’, because it is a social-evolutionary process, not an ‘event’).

So, when my I visited (as do daily) Café Hayek and found Russell Roberts referring to an article by Daniel B. Klein (5 March), professor of economics at George Mason University and chief editor of Econ Journal Watch, in The Library of Economics and Liberty, I was most interested in his post on “The Smith-Hayek Economist: From Character to Identity”.

In it I found this paragraph:

“The Smith-Hayek Economist: From Character to Identity”

“• a tendency to make the distinction between voluntary and coercive action clear in formulating many basic economic categories, principles, and arguments;

• an appreciation that knowledge is not merely information, but also interpretation and judgment, and as such is highly particular to the individual and the moment; it is essential for humans to err, in the sense that they kick themselves for having interpreted or judged badly;

• a sense that economics must be relevant and serve social purposes, and that such service necessarily entails heavy engagement with non-economists, notably laypeople and policy-makers;

• a sensibility that economic reality is incredibly complex, inspiring the eschewal of efforts to paint a picture of the economy or how it "really" works;

• a sober, non-romantic view of government—since economic reality is scarcely knowable, we should be wary of those who pretend to manipulate it beneficially;

• a presumption in favor of liberty, not the status quo. The Smith-Hayek characteristics are by no means typical of economists today. As one who shares those characteristics, I wonder if Smith-Hayek economists could do better. Maybe they would do better if they created an effective "we." ”

CommentHow much more credible is that approach to Smith and Hayek than the ‘normal’ economics science of Homo economicus, which bleeds white the people in the real world of any content and they appear devoid of human characteristics? My collection of books by Hayek is in France and you can be sure I will be re-reading and consulting them when I return in April-June.